Branson Bets His Virgin Brand, Entertainment Will Win in Macau
Richard Branson's plan to open a Virgin brand casino in Macau may hinge upon whether Chinese gamblers will warm to Las Vegas-styled entertainment during breaks from the tables.
Branson visited Macau this week for talks to open a casino- entertainment center, a spokesman for Virgin Group Ltd. said yesterday. The 56-year-old billionaire would join Las Vegas Sands Corp. and Wynn Resorts Ltd. in the world's largest gaming market, which doubled the number of playing tables last year.
``The casino gaming industry is now converging with the broad entertainment industry in a way it never has before,'' Jonathan Galaviz, a partner at gaming consulting company Globalysis Ltd., said today. ``Virgin can use an integrated entertainment development in Macau as a new platform to submerge Chinese consumers into the Virgin brand experience.''
When billionaires Sheldon Adelson of Las Vegas Sands, the world's biggest casino-operator by value, and Steve Wynn entered Macau after the four-decade monopoly of Stanley Ho ended in 2002, they brought some of the pizzazz that's made their hometown base in Nevada's desert famous.
Adelson, Wynn Resorts Ltd., and Kirk Kerkorian of MGM Mirage are building new resorts featuring artificial canals, singing gondoliers, luxury shopping malls and celebrity chefs, in stark contrast to the smoke-stained walls and frayed carpets that were a feature of Ho's decades-old flagship, the Hotel Lisboa.
A Macau venture would add casinos to Branson's business interests that include planned space flights by Virgin Galactic, the airline Virgin Atlantic and online slot games in the U.K. He founded Virgin as a mail-order record store in 1970 and branched into a record label, a radio business, an airline, clothing, soft drinks and railroads.
To operate in the Chinese city, Branson needs to buy a casino license or find a partner who has one. The government has vowed not to release more licenses until 2009 at the earliest.
``I'm sure he'll bring his own unique content to the project,'' said Simon Smith, senior director of research and consultancy at Savills Hong Kong Ltd. ``The Virgin brand is fairly well established and a lot of it is about branding.''
Branson met with Macau Chief Executive Edmund Ho to discuss the possibility of acquiring a 20-hectare site and building a $3 billion resort, featuring three hotels and a casino, Financial Times reported today, citing Branson. Elena Au, a spokeswoman for the Macau government, declined to comment today.
Gambling revenue in the former Portuguese colony surged 22 percent to $6.95 billion last year, surpassing the Las Vegas Strip, as it added seven new casinos, bringing the total to 24. Macau had 2,762 gaming tables in the year to Dec. 31, double that of the year before, according to the Web site of the city's Gaming Inspection and Coordination Bureau.
``If the number of gaming tables continues to double every year, it must substantially hurt the existing operators in term of profit margins,'' Ken Yeung, a gaming analyst at BOCI Securities Ltd. in Hong Kong, said today.
The city's gaming revenue may reach $8 billion in 2007, mainly driven by the scheduled opening of Las Vegas Sands' Venetian Macao in the middle of this year, Galaviz wrote in a report in August. His Las Vegas-based consultancy company estimated 2006 revenue in the Las Vegas Strip at $6.6 billion.
Adelson, chief executive officer of Las Vegas Sands, said he recouped his $260 million investment in Macau in eight months after opening the Sands Macao in 2004, the first U.S.-owned casino in the city.
Wynn Resorts opened the $1.2 billion Wynn Macau in September on the Chinese island. The Las Vegas-based company plans to build a second casino there. MGM Mirage is also building a new resort in the city.
Genting Bhd., Asia's biggest listed gaming operator, announced this
week that its Star Cruises Ltd. unit will open a casino in Macau and sell a stake to Ho. Controlled by billionaire Lim Kok Thay, the Kuala Lumpur-based company may woo gamblers across Asia by offering trips to its flagship resort in Malaysia and to a Singapore casino due to open in 2010.